The Australian Securities and Investments Commission (ASIC) has hit out at ME Bank over the “disappointing” way it handled its problems over client mortgages and said it has had an “avoidable impact” on consumer confidence.
The session, which was called by committee chair Tim Wilson, was inquiring around industry super fund-backed bank ME Bank’s conduct around changing clients’ mortgage redraw arrangements.
ME Bank hit the news last month after unilaterally reducing clients’ mortgage positions by reducing their drawdown facilities without informing them first. The firm claimed it had made the move to prevent customers falling behind on their repayments.
ASIC said between 23-27 April, 2020, ME Bank made adjustments to the arrangements of 21,000 clients.
ASIC said this was not the first time ME Bank had faced redraw problems, having first dealt with the firm in March 2013 when it identified a number of home loans where the amount available to redraw was incorrectly stated.
In a speech to the House of Representatives Standing Committee on Economics, ASIC commissioner Sean Hughes said the negative impact of ME Bank’s actions were exacerbated by the financial problems caused by COVID-19.
“ASIC does have concerns about how this matter has been handled. At a time when there are significant sensitives for consumers about the economic impacts of the COVID-19 pandemic, this matter could have and should have been handled better by ME Bank,” he said.
“It was ASIC’s expectation that ME Bank would communicate with their customers in a clear and transparent manner before making any adjustments to redraw facilities.
“This should have occurred in any normal setting, but in this instance there should have been heightened awareness and sensitivity to explain to customers what was happening to their account balances and why, given the strained economic environment impacting households.”
He said the regulator would continue to monitor the situation to ensure customers received a positive outcome. There had already been 80 complaints made to the Australian Financial Complaints Authority (AFCA) about the situation but Hughes said he expected most would be resolved quickly.
“ASIC will continue to closely monitor ME Bank’s conduct and engage with the bank on this issue, so as to ensure a fair and transparent outcome for ME Bank’s customers. This has been a disappointing experience for ME Bank and has had an avoidable impact on customer confidence,” Hughes said.
“We understand that AFCA has received approximately 80 complaints regarding this issue. However, ASIC understands many have already been resolved, and following a discussion with ME Bank, AFCA are confident that most, if not all, would be resolved at an early stage.”